KATHMANDU, Sept 26: Melamchi Water Supply Development Board today terminated its contract with the Chinese firm for building the diversion tunnel under the Melamchi Water Supply Project.
A week ago, Chinese contractor China Railway 15 Bureau Group Corporation had informed Melamchi Water Supply Development Board (MWSDB) that it would withdraw from the contract, citing some problems over payment and lack of support from the board.
But after three days of submission of its withdrawal letter, the Chinese company had sought support from the government to resume work, saying it was ready to do so if its demands were fulfilled.
However, MWSDB today said it rejects all accusations as was repeatedly clarified to the company and added that there wasn´t any problem with payments at all. It decided to terminate the contract as the company´s motive was found to be suspect.
“We awarded the contract with certain terms of reference and a fixed amount was agreed while signing the contract, but the company time and again pressured us to increase the amount bid, something that was not possible. So we decided to terminate the contract,” said MWSDB Executive Director Krishna Acharya.
The Chinese firm was contracted for Rs 4 billion in 2009 to construct the tunnel.
The letter of termination was handed to the company today.
MWSDB said the company was inefficient and the equipment it used was not of the required capacity. “We had already sent a 52-point recommendation made by engineers to increase technical manpower and buy advance equipment but it turned a deaf ear to our request. So there is no point sticking to the contract,” added Acharya.
The company was contracted to construct the 26.3 km tunnel to divert 170 million liters of water per day from Melamchi to Sundarijal, where the water would undergo treatment before going into the bulk distribution system.
However, the company has constructed only 6.5 km of tunnel over the last three years.
The project was supposed to be completed by the end of 2013.
According to Acharya, negotiations with the company failed after it repeatedly asked for an increase in the bid amount.
“Their motive was to linger on and bargain for more money, which we won´t be able to provide under any circumstance; so there wasn´t any option other than terminating,” he said.
The board said it will start a new bidding process immediately. The procedure would be completed within a week.
“We want to select a new company within six months,” Acharya added.
The board also said that equipment used by the Chinese company would be seized and and an valuation done.The final financial dealings with the company will be done only after the completion of the project.
According to the officials, the board has already corresponded with the banks to return to the government the advance that was paid to the company.
The company was given $6.2 million and 1.4 million Euros as advance on bank guarantee and these will be returned. If the bidding process is finalized within six months it is expected that the tunnel construction will be completed by the end of 2016.